Wednesday, January 18, 2017

Broader Spectrum Licenses Could Increase Auction Revenues

On January 17, 2017, Scott Wallston, President of the Technology Policy Institute, published a blog entitled “Don’t Be Disappointed by the FCC’s Incentive Auction.” Mr. Wallston discusses why the success of the 2015 AWS-3 auction created unrealistic expectations for the broadcast incentive auction. He states that licenses restrict how bidders can use spectrum, therefore wireless-only spectrum will produce higher market values than TV broadcasting-only spectrum. Mr. Wallston commends the FCC for going forward with the incentive auction, but says if licenses allowed for a broader use of spectrum, we may see higher auction revenues. 

Monday, January 09, 2017

A Proposal for Trialing FCC Process Reforms



For over a decade, I’ve been advocating various reforms in the way the Federal Communications Commission conducts its business, wholly aside from debating the rightness or wrongness of the substance of particular agency decisions. In other words, I’ve long advocated certain process reforms intended to make the Commission function in a more efficient and effective manner, and, when appropriate, in a more transparent manner.

Without further elaboration here, I’ve been privileged to testify before the House Subcommittee on Communications and Technology in 2011, 2013, and 2015, in hearings on various draft bills proposing a variety of specific FCC process reforms. Congressman Greg Walden, then Chairman of the House Subcommittee and now Chairman of the full Committee on Energy and Commerce, deserves much credit for diligently pursuing the cause of FCC process reform during the last six years. Although several of the bills he sponsored, along with various of his colleagues, passed the House of Representatives, they were not given serious consideration in the Senate.

At the FCC, despite a few very modest gestures, there were no serious efforts by Chairman Tom Wheeler to adopt consequential reforms in the way the Commission conducts business. Indeed, some might argue that there has been a deterioration of process during Chairman Wheeler’s tenure that, if anything, has contributed to a deterioration in the substantive quality of the agency’s decisions.

But that is not the argument I wish to make today.

What I want to suggest is that, as soon as practical after it gets organized, the newly reconstituted Commission should get on with implementing process reforms. And, more specifically, I suggest, for certain changes that may be considered more controversial for one reason or another, that the Commissioners consider implementing them on a trial basis with a review to take place on a date certain. There is no reason why the Commission cannot be open to some experimentation and trialing in the area of process reform, secure in the knowledge that experience may dictate further modifications.

It is well-known that Commissioner Michael O’Rielly has been a vocal, persistent, and eloquent advocate of FCC process reform over the last several years through his blogs, speeches, and opinions. Indeed, in a July 2016 blog, “Snapshot of Process Reform Ideas,” Commissioner O’Rielly posted a list of 24 proposals he has made. In doing so, he explained that:

These efforts have never been an attempt to undermine the authority of the Chairman or the ability of the Commission majority, whoever they may be on a particular issue, to get items completed in a timely manner.  Instead, this entire effort is about improving the efficiency of the Commission and increasing fairness and transparency with regard to a process that is questionable in some instances and downright objectionable in others.

I’ve agreed with many of Commissioner O’Rielly’s suggestions and have questions about others. Some are truly more pure process reforms than others, and some are more consequential than others. But no one can deny the effort that Commissioner O’Rielly has put into this project or the thoughtfulness with which he has approached it. (I would be remiss in not applauding Commissioner Pai’s ongoing process reform efforts as well.)

Consider one of Commissioner O’Rielly’s (and Commissioner Pai’s) most consequential proposals: “Publicly post Open Meeting items at the same time as circulated to Commissioners.” I happen to agree with this proposal. As I explained at some length in my May 2015 House Subcommittee testimony, posting the draft Open Meeting agenda items is consistent with the “best practices” suggested by the Administrative Conference of the United States in a 2014 Recommendation. And in an era when it became common practice for the agency’s Chairman to post a blog describing his own views regarding the contents of a draft item, often along with a “fact sheet” containing the Chairman’s own version of the “facts,” it seems to make little sense to deny the public access to the full text of the item. Posting the text on the Commission’s website will eliminate disparities in access by the public to Commission information and also reduce misunderstandings that arise from selective filtering and partial release of snippets of the draft item.

Nevertheless, because posting draft Open Meeting items represents a substantial departure from the way the Commission has operated for decades, many question how this change will affect the way the Commissioners interact among themselves and the public during the period leading up to the Sunshine cut-off period and whether, in turn, such changes may affect adversely the quality of the Commission’s decisionmaking. These are not frivolous concerns.

The principal point I want to make here is that I see no good reason why the Commissioners could not adopt that particular process reform with the proviso that the new procedure will be evaluated after a year or two. And, then, based on actual operating experience, changes can be made if deemed advisable.

The same can be said for other reform proposals about which there may be legitimate differences of opinion, such as requiring that all “editorial revisions” be completed and orders published within three or four business days after the Open Meeting. Or allowing any Commissioner to elevate a decision about to be made on delegated authority to a full Commission vote.

I start from the premise, which shouldn’t be subject to serious dispute, that there are ways that the Commission can improve its process – the manner in which it conducts its business – so that it operates in a more efficient, more effective, and more transparent fashion. Every institution can. There is no reason there should be any partisan disagreement about this.

Process matters. Better process not only can improve the productivity of the Commission, but, more importantly, it can improve the quality of the agency’s decisions. I certainly am not suggesting that all process reforms need to be subject to trials. But if the notion of trialing changes in procedure is a means to the end of getting certain consequential process reforms adopted sooner rather than later, the newly constituted Commission should be open to this idea.

Tuesday, December 20, 2016

Should the FCC Join the Federal eRulemaking Program?

On December 19, 2016, John W. Davis II, the founder and CEO of Notice and Comment Inc., published an article in The Hill proposing an interesting idea for the FCC to join the federal eRulemaking Program. Regulations.gov serves as the government’s public-facing portal where federal agencies issue regulatory notices and accept citizen responses, but unlike most federal agencies, the FCC uses its own system for publishing rulemakings and accepting comments.
Mr. Davis says that the wave of 4 million comments made during the Net Neutrality proceeding showed a clear “need for modernization of the Commission’s processes.” Not only did the FCC’s comment system crash in 2014, but “it ended up taking nine months and an estimated $50 million for the FCC to consider the entire comment dataset.” On the other hand, Mr. Davis endorses the federal eRulemaking Program:
With standardization of data comes a whole new level of immediate transparency in governance, permitting a higher degree of public participation -- and at earlier stages of the process, such as the discovery phase of highly common utility-pole- attachment disputes, which fall under FCC purview. This greater degree of public data accessibility should naturally result in more efficient complaints adjudication.
Given the possibility that the FCC’s Open Internet Order could get repealed by the incoming Commission, Mr. Davis says that the FCC should join the eRulemaking Program as soon as possible. He states:
[I]f net neutrality rules are re-opened for consideration, judging from public response to the last round, the FCC stands to be inundated by many millions of comments. Even if the Commission’s network does not crash again, its staff of lawyers are sure to be occupied for several months manually reviewing and analyzing the tidal wave of data. Meanwhile, businesses will remain in a state of uncertainty about the shape of the future telecom regulatory environment.
The benefits in terms of cost savings, government responsiveness, and public data transparency make the move an obvious choice.
If the FCC were to join the eRulemaking Program, there still would remain many areas of necessary process reform (see here, here, and here). However, the proposal is certainly an interesting one that should garner consideration.

Thursday, December 15, 2016

More on Facebook and Fake News

On November 25, I posted a blog, "Mark Zuckerberg and Fake News," in which I addressed Facebook CEO Mark Zuckerberg's post on "fake news." I included this excerpt from his November 25 post:

“The problems here are complex, both technically and philosophically. We believe in giving people a voice, which means erring on the side of letting people share what they want whenever possible. We need to be careful not to discourage sharing of opinions or to mistakenly restrict accurate content. We do not want to be arbiters of truth ourselves, but instead rely on our community and trusted third parties.”

And I said: "Mr. Zuckerberg commendably outlines some measures Facebook itself is considering to address the fake news issue."

Now, in a December 15 post, "News Feed FYI: Addressing Hoaxes and Fake News," Adam Mosseri, VP, News Feed, offers some steps that Facebook is taking now to address "fake news." These steps include: easier reporting; flagging stories as disputed; informed sharing; and disrupting financial incentives for spammers.

Mr. Mosseri acknowledges that these are first steps, and that Facebook intends to learn from them and adjust accordingly if advisable.

As Mr. Zuckerberg said in November, "[t]he problems here are complex, both technically and philosophically." This certainly is true, it's why it makes sense, as Mr. Mosseri says, to approach the fake news problem carefully.

The steps that Facebook has announced seem reasonable, certainly on a trial basis so that their effect on users' experience can be gauged. It's important that Facebook and other similar platforms take the initiative themselves to consider means of addressing the problem of fake news in ways that are compatible with the vast majority of users they seek to attract and serve. If they don't, there may be calls, however misplaced, by some for the government to "just do something."

That would be terribly wrong. On this point, I'll just repeat what I said in my earlier post:

"As a matter of sound policy, the government should stay out of the business of evaluating the truthfulness of news, except, for example, in rare instances involving public health and safety. And as a matter of law, the First Amendment’s free speech clause demands no less."

Wednesday, December 14, 2016

New White House Report Promotes Enforcement of IP Rights

On December 12, 2016, the White House’s Office of the U.S. Intellectual Property Enforcement Coordinator (IPEC) published a report entitled “Supporting Innovation, Creativity and Enterprise: Charting a Path Ahead,” which promotes strengthening the enforcement of IP rights in the U.S. and abroad for the next three years.
The IPEC submits a joint strategic plan to Congress every three years under the Pro-IP Act of 2008. The Pro-IP Act outlined the following objectives for the joint strategic plan:
  • Reduce counterfeit and infringing goods in domestic and international supply chains;
  • Identify unjustified impediments to effective enforcement action against the financing, production, trafficking, or sale of counterfeit or infringing goods;
  • Support the sharing of information to curb illicit trade;
  • Disrupt domestic and international counterfeiting and infringement networks;
  • Strengthen the capacity of other countries to protect and enforce intellectual property rights;
  • Establish with other governments international standards and policies for the effective protection and enforcement of intellectual property rights; and
  • Protect intellectual property rights overseas by enhancing international collaboration and public-private partnerships.
With those objective in mind, the joint strategic plan for FY 2017-19 sets goals including: (1) enhance national understanding of economic and social impacts from trade secrets misappropriation and IP rights infringement; (2) minimize counterfeiting and IP-infringing activity online; (3) secure and facilitate lawful trade; and (4) enhance domestic strategies and global collaboration.

IPEC Daniel Marti should be commended for the new report. Not only does it recognize the impact that strong protections of IP rights has had on U.S. GDP ($6.6 trillion value added), but it addresses key ways that IP rights can be strengthened including: curbing illicit efforts with innovative enforcement techniques; increasing the ability of consumers to recognize illegal content and goods; and using trade agreements to promote strong global IP rights.
Utilizing various means to enforce rights enables artists and creators to earn a return on their labor and incentivizes innovation and economic activity around the world.

Monday, December 12, 2016

The Core Copyright Industries Continue to Boost the U.S. Economy


On December 6, 2016, the International Intellectual Property Alliance (IIPA) published its 2016 report entitled “Copyright Industries in the U.S. Economy.” The new report, authored by Stephen E. Siwek, finds that the “core copyright industries,” – that is, industries whose primary purpose is to create, produce, distribute or exhibit copyright materials – generated $1.2 trillion in economic activity in 2015, accounting for 6.88% of the U.S. economy. In the same year, the core copyright industries employed 5.5 million workers, which is 3.87% of the entire U.S. workforce.
At a time when much attention is focused on reviving America’s economic growth and job creation prospects, these figures should not be lightly dismissed.
The core copyright industries do not just comprise a substantial portion of the American economy; they continue to grow at an above average pace. Between 2012 and 2015, the core copyright industries grew at an aggregate annual rate of 4.81%. This is 127% greater than the growth rate (2.11%) for the entire U.S. economy over the same period. Furthermore, the average annual compensation paid to core copyright workers is $93,221, which is 38% higher than the average annual compensation paid to all U.S. workers, $67,715.
Additionally, the core copyright industries are a key contributor to U.S. exports. The new report finds that sales of selected U.S. copyright products in overseas markets amounted to $177 billion in 2015, a significant increase from $164 billion in 2014. This is impressive considering that other major industries, such as chemicals, pharmaceuticals and medicines, agriculture, and electronics saw little or no growth in their respective exports over the same period. (See the chart below.)
Foreign Sales & Exports for Selected U.S. Industries (Billions of U.S. Dollars)
2014
2015
Selected Copyright Industries (Motion Pictures, TV, Video, Recorded Music, Newspapers, Books, periodicals, Software Publishing)
$164.4
$177.0
Chemicals
$145.9
$135.8
Aerospace Products and Parts
$129.0
$134.6
Agricultural Products
$72.9
$62.9
Electrical Equipment, Appliances & Components
$60.6
$60.3
Pharmaceuticals & Medicines
$54.5
$58.3

In a December 2016 blog, Michael Horney discussed why it is important for President-elect Donald Trump to reconsider his apparently negative perception towards the Trans-Pacific Partnership (TPP) and similar trade agreements. By implementing strong Intellectual Property protections for 12 member countries, TPP would incentivize creation and innovation among American (and foreign) entrepreneurs. If TPP is adopted, the U.S. would see a significant increase in the amount the U.S. exports, including core copyright and IP-intensive industries.
The IIPA’s report shows that the core copyright industries play a large role in the U.S. economy and that these market segments are growing at a faster rate than most U.S. markets. The United States’ robust protection of intellectual property rights has incentivized creation and entrepreneurial activity that has not only benefitted American consumers and workers, but also has spurred economic activity overseas.
The core copyright industries continue to boost the U.S. economy!

Friday, December 09, 2016

New Proposal Would Modernize the Copyright Office's Outdated Technology

On December 8, 2016, the House Judiciary Committee Chairman Bob Goodlatte and Ranking Member John Conyers proposed to modernize the U.S. Copyright Office for the 21st Century. The proposal would allow the Copyright Office to have autonomy over its budget and technology needs. The proposal also would allocate to the Copyright Office the necessary funds for information technology modernization, enabling the Copyright Office to maintain a “searchable, digital database of historical and current copyright ownership information.”
The Copyright Office is long overdue for technology modernization and FSF scholars have made multiple statements regarding this need. (See here, here, and here.) Modernization is necessary for our copyright system to achieve its important purposes of protecting artists’ and creators’ rights to earn a return on their labor and to facilitate market transactions in copyrights in a way that promotes “the Progress of Science and useful Arts.”
We commend Chairman Goodlatte and Ranking Member Conyers for their proposal and hope it quickly passes through the House of Representatives.